Tue, 12 Feb 2019 00:23:43 +1100EditMySiteMon, 11 Feb 2019 06:55:49 GMThttp://www.taylor-david.com/news/employee-fraud-recovering-assets-and-seeking-restitution-by-chad-gear-and-greg-grunertHalf of the frauds committed in Australia are perpetrated by business “insiders”; either employees or management,[1] with the total value of frauds in Australia increasing to a value of $442m for the six month period ending in September 2016 (up by 19% compared with the previous six month period).[2] More than half of those frauds were committed in Queensland.[3]

The primary focus of a business owner is often the recovery of misappropriated assets or financial compensation. However, the damage caused by employee fraud can extend beyond financial loss to include risk to operational viability, reputational damage, and a negative effect on employee morale.[4]

We explore in brief below some of the strategies and relevant considerations when seeking to recover misappropriated assets or compensation (restitution) for cases involving employee fraud.

Where to start?

For many businesses, the initial response when discovering employee fraud is to:

confront the employee and/or terminate their employment; and/or

report the matter to police.

However, for any business that seeks to recover compensation, their first considerations should be:

obtaining information; and

protecting or preserving assets (including in the hands of the employee or third parties).

Speed is key (delay will weaken your ability to obtain urgent Court orders), and employers should involve their lawyers in the evidence gathering at the earliest possible stage to ensure that:

evidence is obtained is in a form that can be used in Court; and

the prospect of recovery is maximised.

Obtaining information

Before confronting an employee and alerting them to the fact that you are aware of the fraud, employers should seek legal advice to ensure that the evidence necessary to recover compensation has been properly obtained. Because employee fraud can carry serious criminal consequences, recovery proceedings are often defended, and there are a number of restrictions on alleging fraud in Court proceedings which means that evidence must be carefully obtained. For these reasons, an employer should take swift and careful steps to secure as much evidence as possible at an early stage.

Part of the information gathering process can include obtaining a forensic accounting report, which can be used to “freeze” assets of the employee (including in the hands of third parties) and ensure that they are not disposed of, or diminished in value, while Court proceedings are on foot.

Once sufficient evidence is obtained, an employer can apply to Court urgently (without notifying the employee) to seek:

“asset disclosure orders”,[6] which requires an employee to provide details of the value and location of their assets;

“search orders”,[7] which allow your solicitor to enter premises and seize evidence to prevent its destruction or disposal; and

“travel restrictions”,[8] to prevent the employee from leaving Australia.

Protecting assets

Freezing orders are an extremely useful tool which can be obtained urgently and prior to the commencement of recovery proceedings to:

“freeze” bank accounts;

prevent the sale of real property or assets; and

prevent the removal of assets out of Australia.

Such orders are of advantage to an employer because they prevent an employee from dissipating or disposing of assets which can later be used to satisfy a judgement obtained to recover compensation.[9]

Further considerations

Once criminal proceedings are commenced, it is often the case that recovery proceedings will be “stayed”, meaning that if the employee defends criminal proceedings, the business owner will be prevented from progressing civil proceedings to recover what has been stolen from them.

Defending a criminal proceeding can also be a costly exercise that can have the effect of depleting the employee’s assets, and further preventing recovery. For that reason, where recovery is possible, it is often recommended that this be pursued before reporting the matter to police.[10]

Recovering compensation

Freezing orders (and associated orders) are just one part of the recovery process; Court proceedings which seek an order for compensation must also be prosecuted.

Court proceedings can take many different forms, as there are a range of actions which can be taken against an employee (or third parties such as friends and family of the employee), to recover compensation.

The relief which can be sought includes damages and restitution for (among other things):·“fraud”;·“fraudulent misrepresentation”; ·“money had and received”; and·the “tort of deceit”.Ultimately, the relief that an employer should seek from the Court will depend upon the nature of the fraud, and what has happened to the assets, including whether the assets remain in the hands of the employee, have been mixed with other assets, and even whether the assets have increased or decreased in value.Further action

While prevention is better than a cure, there are no foolproof methods of preventing employee fraud; even the most sophisticated internal controls can be circumvented. If faced with circumstances which cause you to suspect that your business has suffered from employee fraud, we recommend that you immediately seek legal advice.

If you wish to explore making a claim or seeking to recover assets as a consequence of employee fraud, contact Chad Gear on (07) 3227 1616, or by email at c.gear@taylor-david.com.

While attempts have been made to ensure the currency of information contained in this publication, we do not guarantee its currency. This publication is intended to provide only general information on matters of interest. As such, this publication is not intended to be comprehensive and does not constitute and must not be relied upon as legal advice.You should seek legal or other professional advice which is specific to your circumstances.

[1] https://home.kpmg.com/au/en/home/insights/2017/01/fraud-barometer-april-september-2016.html.[2] https://home.kpmg.com/au/en/home/insights/2017/01/fraud-barometer-april-september-2016.html.[3] https://home.kpmg.com/au/en/home/insights/2017/01/fraud-barometer-april-september-2016.html.[4] Chelan, David (1 May 2006) “The cost of corporate fraud”, Smart Business.[5] Also known as “mareva orders”, Uniform Civil Procedure Rules 1999, r. 260A.[6]Uniform Civil Procedure Rules 1999, r. 260B.[7] Also known as an “anton pillar orders”, Uniform Civil Procedure Rules 1999, r. 261A.[8] A write “ne exeat regno”, Uniform Civil Procedure Rules 1999, r. 259(2)(c).[9] Supreme Court of Queensland, Practice Direction 1 of 2007, para. 3; http://www.courts.qld.gov.au/__data/assets/pdf_file/0020/86411/sc-pd-1of2007.pdf.[10] It is important to note that in most states in Australia, if a person fails, without reasonable excuse, to report to the Police or other relevant authorities, conduct which amounts to a serious indictable offence, that person is liable to imprisonment for two years. A reasonable excuse may include steps taken to recover misappropriated assets.

]]>Tue, 28 Aug 2018 07:25:56 GMThttp://www.taylor-david.com/news/creditors-statutory-demands-grounds-to-set-aside-chad-gear-and-greg-grunertIn “Creditor’s statutory demands; debt collection tool?”, I explored the circumstances in which a Statutory Demand can be issued to recover a debt. In this article, I set out the circumstances in which a Statutory Demand can be set aside.

If you have received a Statutory Demand, we recommend that you seek legal advice immediately.

Setting aside a statutory demand

An application to have a Statutory Demand set aside must, within 21 days after the date on which the demand is served on the company, be:

served (along with a supporting affidavit[3]) on the company or individual/s who issued the Statutory Demand.[4]

It is not sufficient to simply file the application and supporting affidavit with the Court within the 21 day period; the application and supporting affidavit must also be validly served on the person who issued the Statutory Demand. Although this can be done by serving the application and supporting affidavit at the address contained in the Statutory Demand (as long as the address for service is in the state in which the demand was served),[5] in circumstances where the issuing party is a company, the better course is to serve the documents at the registered office.[6] In circumstances where the issuing party is an individual, service can be effected at the address for service contained within the Statutory Demand, or in accordance with section 28A of the Acts Interpretation Act 1901 (Cth).

The application[7] should be made pursuant to section 459G of the Corporations Act 2001 (the Act), in reliance upon sections 459H, or 459J of the Act.

Importantly, the “Graywinter principle”[11] requires, in short, that all of the grounds of dispute which are intended to be relied upon at the hearing must be raised in the supporting affidavit filed with the application. In this regard, although Justice Sundberg made a number of observations in the Graywinter case regarding the minimum requirements of the contents of a supporting affidavit, the primary principles to be derived from the case were as follows:

the affidavit must say something that “promotes” the company’s case, ie. it must in some way advance, further or assist the company’s cause (setting aside the Statutory Demand); and

a bare claim or mere assertion that the debt is disputed is not sufficient.

21 days is not a long a long time to prepare an application and supporting affidavit, especially if a client is late in retaining solicitors (as is often the case). Accordingly, the Courts recognise that “ideal standards are not always achieved or achievable.”[12] As such, the Courts apply a “benevolent construction” to the contents of the affidavit.[13] Importantly, the affidavit material can be supplemented.[14] However, the weight of the authorities suggests that new grounds cannot be raised in an affidavit filed outside the 21 day time limit.[15] In this regard, the High Court’s refusal to grant special leave to appeal in Energy Equity Corp Ltd affirmed that no new grounds can be relied upon which are not contained in the material filed within the 21 day time limit.[16] Accordingly, the affidavit served within the 21 day time limit must contain all of the grounds which the applicant seeks to rely upon at the hearing of the application.

Grounds to have a statutory demand set aside

A Court may grant an order to set aside a Statutory Demand where it is satisfied that one or more of the follow four categories applies:

there is a “genuine dispute” about the existence of a debt to which the Statutory Demand relates;[17]

the company who received the Statutory Demand has an “offsetting claim”;[18]

because of a defect in the Statutory Demand, substantial injustice will be caused unless it is set aside;[19]

there is some “other reason” why the Statutory Demand should be set aside.[20]

Genuine dispute

A company may have a Statutory Demand set aside on the basis that there is a “genuine dispute” about the existence or the amount of the debt the subject of the Statutory Demand.[21] There are a number of different judicial tests for determining the existence of a genuine dispute. The two main tests are as follows:

In Eyota, McLelland CJ held that a genuine dispute “connotes a plausible contention requiring further investigation” and likened the test to a “serious question to be tried” in an application for an injunction.

the grounds for alleging the existence of a dispute must be real and not spurious, hypothetical, illusory or misconceived.

The test in Eyota is the most frequently used test[24] and is the test preferred in New South Wales, Western Australia, and South Australia.[25] The test in Spencer Constructions is the test preferred in the Federal Courts. The Courts in Queensland, Tasmania, Victoria, the ACT and the NT have applied the tests in Eyota and Spencer Constructions equally.[26]

Notwithstanding the different formulations, the following limbs are common to both tests:

a bona fide dispute that truly exists in fact; and

the dispute must have an objective existence, the genuineness of which must be capable of being assessed.[27]

The onus and the evidence

​While the onus to set aside a Statutory Demand is borne by the applicant, it is not a heavy one,[28] and while “considerable latitude” is afforded to a party asserting the existence of a genuine dispute which would justify the setting aside of a Statutory Demand,[29] an applicant will fail in discharging the onus if the contentions on which it seeks to rely are “so devoid of substance that no further investigation is warranted”.[30] In saying this, Courts will not embark upon an “extended inquiry” and will not attempt to weigh or assess the merits of the dispute.[31] The burden has been likened to an application for summary judgment,[32] an injunction[33] or an application to extend or remove a caveat.[34]

Offsetting claim

A company may have a Statutory Demand set aside on the basis that it has an “offsetting claim”.[35]Section 459H defines an “offsetting claim” as “a genuine claim that the company has against the respondent by way of counterclaim, set-off or cross-demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates).”

Although the offsetting claim must be “due and payable”[36], it can be liquidated or unliquidated[37].

Defect

A company may have a Statutory Demand set aside on the basis that, because of a defect in the demand, substantial injustice will be caused if it is not set aside.[38]

The circumstances which can give rise to defects are varied. In order to set aside a Statutory Demand on this basis, the defect must also cause “substantial injustice”. As Justices French, Kiefel and Sundberg held in Equuscorp,[39] there must be “substantial injustice to ground the exercise of the discretion under subs 459J(1)(a)”.In Spencer Constructions[40], the court held that a defect in the demand is only to be set aside if substantial injustice would otherwise be caused. However, if there is any other defect, including a defect “in relation to the demand” rather than in the demand itself, the demand may be set aside only if the court is satisfied that there is some reason for doing so which goes beyond the mere defect itself, and as such may be set aside under section 459J(1)(b).

Some other reason

Finally, a Court may set aside a Statutory Demand for “some other reason”.[41]

The category of cases which fall within section 459(J)(1)(b) are not comprehensively defined.[42] However, matters which may constitute “some other reason” include:

the absence of a supporting affidavit,[43] or the lapse of an unduly long time (ie. as little as two days) time between the swearing of an affidavit in support, and the signing of the Statutory Demand;[44]

deficiencies in the verifying affidavit (such as a failure to depose there is no genuine dispute about the existence or amount of the debt);[45]

If after 21 days of being served with a Statutory Demand, the demand is still in effect (ie. it has not been complied with, unequivocally withdrawn or no valid application to set it aside has been filed), the company is presumed to be insolvent,[50] and the creditor can rely upon the presumption in an application to have the company wound up. The presumption is effective for a period of three months,[51] and is rebuttable.[52]

Further actionGiven the seriousness of the consequences which flow from non-compliance with a Statutory Demand, we recommend that legal advice be sought as soon as possible after receipt.

If you wish to explore issuing a Statutory Demand, or have been served with a Statutory Demand, contact Chad Gear on (07) 3227 1616, or by email at c.gear@taylor-david.com.

While attempts have been made to ensure the currency of information contained in this publication, we do not guarantee its currency. This publication is intended to provide only general information on matters of interest. As such, this publication is not intended to be comprehensive and does not constitute and must not be relied upon as legal advice.You should seek legal or other professional advice which is specific to your circumstances.

[8] The Act and the Corporations Rules in the UCPR do not require the affidavit in support to annex a copy of the Statutory Demand. However, a Court cannot set aside a Statutory Demand which has not been put into evidence, or at the least referred: Denet Pty Ltd v Global Marketing Group International Pty Ltd (2002) 20 ACLC 301.

[10] It is important to also be aware that a hearing to set aside a Statutory Demand is a final hearing, and hearsay evidence is not ordinarily admissible; Westpoint Management v Goakes [2002] WASCA 317 at 7.

Chad brings with him over a decade of litigation experience having acted in many complex and high profile commercial disputes.

Partner Scott Taylor said: ‘I would like to heartily congratulate Chad on his appointment. Chad has an enviable reputation in litigation among his peers. We are excited to expand upon our traditional practice areas of reconstruction and insolvency to commercial litigation through Chad’s appointment. This expansion enables us to deliver exceptional service to an expanding client base throughout Australia. We are elated to have Chad join the firm and look forward to servicing clientele beyond the scope previously offered.’

Taylor David’s practice areas now extend to litigation and dispute resolution within the following areas:

Scott D. TaylorPartner]]>Thu, 04 May 2017 04:13:14 GMThttp://www.taylor-david.com/news/creditors-statutory-demands-debt-collection-tool-chad-gearDebt recovery series: Debt recovery should be a fast and inexpensive process. For many businesses that are owed debts, issuing a “statutory demand” will often be the first avenue which is explored for the purpose of recovery. In this article, I explore in brief the basics of a statutory demand, and whether it can be used as a debt recovery tool.

Creditor’s statutory demands; debt collection tool?Creditor’s statutory demands (commonly referred to as Statutory Demands or Stat Demands) are written demands pursuant to section 459E of the Corporations Act 2001 (the Act), in which a creditor makes demand for payment of a debt within 21 days. If the debtor does not pay the debt or otherwise comply with the Statutory Demand, the recipient will be deemed insolvent, and the party who issued the Statutory Demand can rely upon this presumption in applying to the Court to have the debtor wound up in insolvency.

In certain circumstances a Statutory Demand can be issued without first obtaining a judgment. As such, they are often liable for use as a debt collection tool (dealt with in more detail below).

If you have received a Statutory Demand, we recommend that you seek legal advice immediately. ​How do they work?A person who is owed a debt which is due and payable, and which is at least the statutory minimum (ie. $2,000 or more[1]) may serve a Statutory Demand on a debtor company. Schedule 2 of the Corporations Regulations 2001 provides the prescribed form. Because a defect in a Statutory Demand can provide grounds for having a Statutory Demand set aside, we recommend that legal assistance be obtained to issue a Statutory Demand.

If the debtor company fails, within 21 days of receiving a Statutory Demand, to comply with the demand (as set out above), the debtor company will be presumed to be “insolvent”.[7] This means that the creditor can apply to the Court for an order that the debtor be wound up in insolvency (ie. placed into liquidation).[8]

The presumption of insolvency which arises when a debtor fails to comply with a Statutory Demand can be rebutted by evidence that the company is solvent. However, this can be a costly and difficult exercise.

Why issue a Statutory Demand?The main reason a creditor may choose to issue a Statutory Demand is because it can be an inexpensive process to recover a debt quickly (compared with the usual Court process).

Practically speaking, a creditor who issues a Statutory Demand will quickly ascertain (ie. within 21 days) whether a debtor can pay a debt, or whether the debtor is content for a presumption of insolvency to arise. In the latter circumstances, the logical conclusion is that the debtor may face an application to be wound up in insolvency. However, the purpose of Part 5.4 of the Act is to:

discourage or prevent insolvent companies from continuing to trade and incur further debts which it will be unable to pay;[9] and

provide a means whereby the insolvency of a debtor company may be established for the purposes of an application to wind up that company.[10]

As such, the purpose of a Statutory Demand is to facilitate proof of insolvency to assisting in a winding up application.

Debt collection tool?It is a settled position at law that that a Statutory Demand is not merely a debt collection device.[11] In this regard, the Court has explicitly held that “the statutory demand is not provided by the law as a mechanism for the recovery of debt.”[12]

As such, issuing a Statutory Demand will be an abuse of process if the purpose of the party issuing the demand is not to pursue the Statutory Demand to wind up the debtor company on the ground of insolvency, but rather is to use the process as a means:

of obtaining an advantage for which the process is not designed; or

to obtain some collateral advantage beyond what the law offers, such as the application of pressure to compel payment of a disputed debt.[13]

The Courts have long held that when a company is solvent, the appropriate course is to commence Court proceedings for recovery of the debt, on the basis that to pursue winding up proceedings may be an abuse of process of the Court.[14]

However, Statutory Demands are undoubtedly a fast and inexpensive means of testing the bona fides of a debtor who disputes payment, and to recover payment. While there is some judicial comment to the effect that service of a Statutory Demand may appropriately be used to assist in testing whether a dispute is genuine[15], the overwhelming view is that Statutory Demands do not provide a means to avoid commencement of proceedings for recovery of a disputed debt, by the application of commercial pressure.[16]

Further actionWhile Statutory Demands may provide an inexpensive and effective debt recovery tool, care must be taken not to use such a tool merely as a debt collection device, or for an improper purpose. As such, they may be liable to be set aside.

If you wish to explore issuing a Statutory Demand, or have been served with a Statutory Demand, contact Chad Gear on (07) 3229 9800, or by email at c.gear@taylor-david.com.

]]>Tue, 23 Aug 2016 14:00:00 GMThttp://www.taylor-david.com/news/2nd-annual-brisbane-charity-luncheonTaylor David is proud to be a sponsor of the 2nd annual Brisbane Charity luncheon this year in support of HELP Enterprises.

HELP Enterprises is a local charity supporting people with disabilities by providing a broad range of services including employment opportunities; training; respite accommodation; and family support. Funds raised from this year’s luncheon will go directly in to developing housing projects in Mitchelton to accommodate up to 20 residents who live with disabilities.

To register, please go to: http://brisbane.idsupportevents.com.au/]]>Thu, 07 Jul 2016 14:00:00 GMThttp://www.taylor-david.com/news/dane-grauf-promoted-to-senior-associateWe are proud to announce Dane Grauf has been promoted to Senior Associate after 5 years with Taylor David.Dane has extensive experience providing advice on corporate turnarounds; complex insolvency law; and distressed debt buyouts and equity swaps. Partner Scott Taylor said of the promotion: ‘The leadership, technical and commercial expertise developed by Dane during his time with the firm has been exceptional. His promotion is in recognition of continued excellence and client satisfaction.’Congratulations Dane.]]>Thu, 25 Feb 2016 13:00:00 GMThttp://www.taylor-david.com/news/energy-markets-233000-jobs-lost-worldwideGlobal energy markets have been suffering for some time leading to large restructures and insolvencies. According to Swift Worldwide Resources, about 233,000 jobs worldwide had disappeared from the sector since the collapse of crude prices in the latter part of 2014.In a recent report, Deloitte stated it did not anticipate smooth sailing in the near future suggesting the shift in demand from North America and Western Europe to Asia Pacific and Middle East would change the traditional dynamics.Taylor David has significant experience acting for private and listed distressed resources and industrials sector companies, for debt restructure and refinance deals in excess of US$200 million. “It is important to be pro-active rather than reactive in turbulent financial times,” Taylor David partner Scott Taylor said. “All of our services are designed to remove the stress associated with financial decline and focus on turnaround where possible,” he said.

“ Ranging from negotiating with small trade creditors and the Australian Tax Office to global financial institutions, we can assist to find a solution or at the very least, provide guidance to mitigate loss.”A number of Taylor David’s clients are insolvency practitioners (that is liquidators and voluntary administrators) inclusive of accounting firms within the global top four. Acting on behalf of insolvency practitioners to pursue directors and transactions in an insolvency context places Taylor David in a unique position to provide practical forecasts on what a director or company may expect should external administration be necessary.Mr Taylor said a variety of options were available to assist the turnaround process.“Our focus is on reviewing, restructuring, refocusing and refinancing where possible. “There are a number of methods through which a turnaround can take effect, however each is subjective to the individual company.”Taylor David offers confidential, obligation free meetings to discuss viable options.]]>Thu, 03 Dec 2015 13:00:00 GMThttp://www.taylor-david.com/news/rexel-electrical-supplies-pty-ltd-v-morton-as-liquidator-of-south-east-queensland-machinery-manufacturing-and-distribution-mining-no-1-in-liq-2015-qca-235In brief: An Appeal from a decision of the District Court of Queensland largely based upon evidentiary grounds concerning an unfair preference action, inclusive of: the good faith defence; the running account defence; the liquidators reliance upon books and records to determine solvency.

Taylor David represented the successful Respondent Liquidator in this Appeal.

Despite what many within the insolvency industry have viewed with controversy, the set-off applied in the original District Court decision was not raised or addressed by the Court of Appeal. It appears that is is only a matter of time before a superior court reconsiders the application of set-off to an unfair preference claim under section 553C of the Corporations Act 2001.

Grounds of Appeal

The grounds of appeal were broadly based upon claims the learned Trial Judge erred in:

Admitting certain documents into evidence.

His finding of insolvency based upon certain documents.

Failing to address the matters within the Appellants submissions.

Failing to give consideration to related party funding when determining solvency.

Result

All points of appeal failed largely for the following reasons:

The Appellant failed to adduce any evidence to contradict the Respondents evidence raised at first instance.

It was not necessary for the trial judge to frame his reasons with reference to the checklist within Australian Securities and Investments Commissioner v Plymin (No 1).

Due regard was provided to the relevant statutory and common law authorities.

The initial notice of appeal ‘…was incompetent because of the absence of an application for and grant of leave to appeal.’

Orders

The appeal was dismissed with costs.

Implications

The original decision of the District Court remains unchanged, namely:

On Set-Off – Set offs under s 553C are available where unfair preferences apply: This is the first time an Australian Court has determined that s 553C can apply to unfair preferences. The decision of Buzzle Operations Pty Ltd (in liq) v Apple Computers Australia (involving the set-off of an uncommercial transaction rather than an unfair preference) was followed. We reiterate this was not a matter considered by the Court of Appeal.

On Solvency - Liquidators reliance upon books and records available to him/her: The failure of a company to keep correct written records (to satisfy s 286 of the Act) does not, of itself, destroy the basis of permitted reliance on those documents which are available in deciding issues such as insolvency and indebtedness at a particular point in time, or their efficacy.

On Running Account - Continued provision of goods/services may be isolated extensions of credit: Continuing to do business with a company may not constitute a series of transactions within a continuing business relationship, but rather, isolated extensions of credit ancillary to the primary objective of being paid.

On ‘Good Faith’ – Defence not made out notwithstanding some payments made pursuant to an agreed plan.

For a copy of the full judgement, please click here.]]>Thu, 09 Apr 2015 14:00:00 GMThttp://www.taylor-david.com/news/ross-v-cotter-2015-fca-310In brief: A Federal Court of Australia decision addressing deemed service; default judgment in circumstances where the Respondents failed to file a notice of address for service; and the Court’s power to award default judgment in the form of a liquidated debt in circumstances where declaratory relief is sought.

Taylor David represented the successful Applicant Receivers in this matter.

On deemed service under r10.23 of the Federal Court Rules 2011 (Cth) (the ‘Rules’) - Documents that must be served personally on an individual: Deemed service may apply in circumstances where it is not practical to serve the document personally and the document has been brought to the attention of the individual.

On default judgment under r5.23(3) of the Rules – Default judgment in the form of a liquidated debt may be available where declarations are being sought: The Court has power to order default judgment in the form of a liquidated debt for declaratory relief sought.

Decision

Deemed service - r10.23

The Applicants applied under r10.23 of the Rules for deemed service of the originating application material on the First Respondent. The evidence before His Honour was as follows:

Evidence as to circumstances where it is not practical to serve the document personally:

The Applicants’ process server attempted to serve the First Respondent at his last known address and ascertained that he no longer resided at that address;

The process server attempted to contact the First Respondent but the First Respondent did not respond; and

The Applicants were not aware of the First Respondent’s current address for service.

Evidence as to the documents being brought to the attention of the First Respondent:

The Second Respondent was served personally at her place of work;

The Second Respondent and the First Respondent were married; and

From e-mail exchanges it was apparent that the Second Respondent and the First Respondent had discussed the originating application material that was served on the Second Respondent.

His Honour accepted the Applicants’ evidence and found that the originating application material was taken to have been served on the First Respondent.

Default judgment - r5.23(3)

The Applicants' claim was brought by way of originating application. The claim sought declaratory relief and interest. The facts in support of the originating application were disclosed in the affidavit of Mr Ross (see paragraph 25 of the Judgment).

His Honour held that based on the evidence from Mr Ross, the Applicants had established their claim for payment of the sum of $89,406.73. His Honour noted that while it was expressed as declaratory relief paragraph two (2) of the relief sought essentially constitutes a claim for “a debt or liquidated damages” within in the terms of r5.23(2)(b) of the Rules. Further His Honour considered that the words “or any other order” in r5.23(2)(d) of the Rules are broad enough to cover the relief sought, including declaratory relief and an order for payment of the sum of $89,406.73.

His Honour ordered default judgment for the Applicants against the First and Second Respondents under r5.23(2) of the Rules in the sum of $103,247.46 made up as follows: